“How Are We Doing?” Building Up Data and Trust to Improve Health Care

Edward C. Norton

Professor of Health Management and Policy, Professor of Economics

May 6, 2019

“Health care is and will be a large part of the US economy,” says Edward Norton, professor of Health Management and Policy and professor of Economics. “When I was a graduate student in economics, health care made up around 12 percent of the national economy. Today, it’s approaching 20 percent. Health and health care are a significant portion of how Americans spend money.”

That’s because the economics of health touch so many aspects of the economy—labor, public finance and taxation, programs like Medicare and Medicaid, personal behaviors like smoking or financial planning, and competition among hospitals and other players in the health care industry, to name a few. “Health economics allows us to look at data from the US health care system and think about these different aspects of our socioeconomic systems. Our work in this field can affect people’s health and wellbeing on a broad scale,” Norton says.

Measures of Quality

Much of Norton’s current research is on “pay for performance,” the idea that quality should determine compensation. “For years now, Medicare has been trying to shift the way providers are paid. Historically, most providers have been paid for quantity—the more you do, the more we pay you,” Norton explains. “If an operation doesn't go well, a patient is readmitted and the hospital gets paid again. That’s not how the rest of the economy works. If you buy a defective product at a store, you take it back and get a refund or a product that works.“

Achieving quality in health care is complicated. Measuring quality can be too. “It is extremely difficult to objectively and meaningfully evaluate the many aspects of quality, like how sick patients are or how effective a provider-prescribed treatment was,” says Norton.

Norton thinks a strict economic approach—like quantifying incentives through a pay-for-performance program and evaluating outcomes—can provide incentives that will help the health care industry adjust and improve. He looks at whether hospitals change behavior in response to specific micro-level incentives designed to nudge hospitals to do a little better in services they provide regularly. “Over time, those minor changes add up,” he says.

Improving Structure and Communication

As part of the Michigan Value Collaborative (MVC), Norton is on a team of researchers charged with collecting and cleaning data and then providing it back to hospitals. “The data are not directly about quality but are about spending episodes—spending for a single patient over their hospital stay plus everything that happens over the next three months.”

Hospitals that lower their average spending for patients with certain medical conditions get a bonus at the end of the year. “And by including those three months after the initial stay, we get a more comprehensive picture of how effectively a hospital delivers not only the treatment but all the support needed around a treatment,” says Norton.

MVC’s data shows that decreasing costs while improving care is achievable through structural and educational changes: “Talking to the patient and their family about what to do when they're home. Following up with phone calls. Making sure they have not only written instructions but have walked through written materials about their care. Practicing some of their rehab exercises in the hospital before going home. Having nurses spend more time with the patient prior to discharge.”

That list gets much longer. Essentially, Norton wants to consider anything that helps health care providers better inform and educate patients and their families. “Most of it involves being more active about the handoff from one provider to another and working with the patient to have a better experience once they leave the hospital,” he says.

Working with Hospitals

Norton’s description of the whole process is beautifully simple: “We use data to let hospitals know how they’re doing.”

The challenging part, at first, was getting hospitals engaged in a conversation of such intense and potentially critical evaluation. “We work collaboratively with hospitals, bringing them together and discussing openly which hospitals have performed well and which haven’t and sharing ways to improve,” says Norton. “The process has been ongoing for a few years, and hospitals have now developed trust of the data and of each other and can look at un-blinded data in transparent discussions.”

With transparency and trust, Norton and his team have helped these health care providers take great strides forward. “When we get together, we actually call out who’s doing well and who's doing poorly and by how much. People in the audience from those institutions then discuss their experiences. We let them know ahead of time so they’re prepared. It’s not always easy, but it’s really effective,” Norton notes.

Immersed in Collaboration

In talking to Norton, one can see why he relies so heavily on collaborative, transparent communication in his research. Teamwork seems to be his approach to many things.

Norton describes his home Department of Health Management and Policy as highly interdisciplinary: “We have people in policy and political science, sociology, organizational studies, law, economics, demographics, and so on. Across all those disciplines we approach similar questions in different ways. That can be exciting and it can be frustrating. At the end of the day, it helps us refine our solutions. And it’s a terrific department with great colleagues.”

Similarly, as director of the Robert Wood Johnson Health Policy Scholars program, Norton engaged post-doctoral fellows who were economists, sociologists, and political scientists. “We were all interacting and trying to solve problems. It was a great way to see how different disciplines approach problems,” he says.

Norton continues to work closely with a number of former students and current doctoral students. “It’s always good to talk with students who have great ideas, ideas I would never think of,” Norton says. “Students have tremendous energy and want to change the world. I get a chance to learn new things and try to improve what they're doing as well.”

• Learn more about Edward’s achievements in research.

• Read about alumni, faculty, and students in Health Management and Policy.

• Learn more about the University of Michigan Population Studies Center.

• Support research at the School of Public Health.